Thursday, September 30, 2010

Damas announced another remarkable bit of progress and as well yet another "vote of confidence" from its lenders in its proven business model.

Here's the PR from Nasdaq Dubai this morning.

Following the announcement by Damas International Limited (the "Company") on 19 September 2010 that the steering committee of the Company's lenders had, in principle, approved an extension of the standstill agreement to 30 November 2010, the Company announces today that the Company has signed an amendment agreement dated 30 September 2010 to the standstill agreement dated 24 March 2010 (as amended pursuant to two amendment agreements dated 27 April 2010 and 13 July 2010 respectively) between the Company and the steering committee so as to formally extend the standstill to 30 November 2010.

A Company spokesman commented that "the agreement of the steering committee to the standstill extension shows once again the confidence that the bank lenders have in the restructuring process and the strength of the underlying business model of the Company".

If you believe the press release, and I hope you don't, Damas has scored yet another vote of confidence from its lenders.

Actually, it has not.

If there was a vote of confidence from its lenders, it is when they agreed the extension not when they signed the agreement. Not when they signed to document that agreement. Sorry, Damas, you only get one vote from this.

But more importantly this is actually a vote of no confidence in the local legal system.

Rather than say no and refuse an extension. Lenders realized that recourse to local courts would greatly diminish their already worrisome recovery prospects. So they went along with another extension on the 19th and signed it today.